5th Edition PMBOK® Guide–Process 7.1 Plan Cost Management

This post gives an overview of the first of the three planning processes in the Cost Management Knowledge Area, namely process 7.1 Plan Cost Management, with summaries of the inputs, tools & techniques, and output of the process.

1. Inputs

As far as inputs are concerned, the most important ones are the scope baseline, because that represents the work that needs to be done, and the budget will tell you how much money is required to do it. The schedule baseline, which was the output of process 6.1 Plan Schedule Management, is necessary as an input. Other knowledge management plans may provide input as well, some of which are completed after the cost management plan in the list of planning processes. This shows that the planning process is iterative and may require several passes through in order to integrate the various knowledge area management plans.

The project charter will give the high-level summary budget, and those project approval requirements that have to do with the project cost constraints (i.e., the project may absolutely have to be done within a certain amount of money).

The main EEF or Enterprise Environmental Factor is probably going to be the project management software used to create the schedule; the main OPA or Organizational Process Asset is probably going to be the historical information on prior similar projects that can be used to help estimate the schedule.

1. Project Management Plan The following elements of the PM Plan are used in the development of the Cost Management Plan:

  • Scope baseline (= project scope statement, WBS, and WBS dictionary)
  • Schedule baseline
  • Cost, risk, and communications management plans
2. Project Charter Provides the summary budget from which detailed project costs are developed, as well as project approval requirements (particularly those dealing with project cost constraints).
3. EEFs
  • Organizational culture and structure
  • Market conditions (describe what products are available on global market)
  • Currency exchange rates
  • Commercial information such as cost rate information; published seller list prices
  • Project Management Software
4. OPAs
  • Financial control procedures
  • Historical information and lessons learned knowledge bases
  • Financial databases
  • Cost estimating and budgeting-related policies, procedures, and guidelines
1. Expert judgment Uses historical information from prior similar projects and adapts it appropriately to the current project.
2. Analytical techniques Used to choose strategic options related to funding the project.
3. Meetings Planning meetings are used to develop the cost management plan.
1. Cost Management Plan Establishes the criteria and the activities for developing, monitoring and controlling the schedule.

2.  Tools & Techniques

The tools & techniques of the process are exactly parallel to those on process 6.1 Plan Schedule Management:  expert judgment, analytical techniques, and meetings.

3.  Output

The output of the process Plan Cost Management, it will be no surprise, is the Cost Management Plan itself. Essentially what this does is give a framework for of the other processes in the Cost Management knowledge area, and the next post will discuss the detailed contents of the Cost Management Plan.

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